Gründung
Self-employment as a foreign national III
Restriction of the freedom of trade
Pursuant to Section 1 (1) of the Trade, Commerce and Industry Regulation Act (Gewerbeordnung, GewO), the operation of a trade or business is permitted to anyone, regardless of whether it is a natural person or a legal entity , a German citizen or european citizen (who has the same status as German citizen), or a foreign national. Restrictions and exclusions are prescribed by law or, in some cases, are permitted by law. Restrictions on the operation of a trade by a foreign national result from the law on foreigners.
Responsibility of the foreigners authorities
In principle, the foreigners authorities are responsible for measures relating to residence and passport law, as well as decisions under the Residence Act and other laws relating to foreigners (with the exception of naturalization). The local responsibility is based on the actual or intended residence of the foreigner. This means that all extensions and changes to residence permits, including the deletion or partial lifting of onerous ancillary conditions, must be applied for at the foreigners authority at the place of residence. Applications for self-employment must also be submitted by foreigners living in Germany to the local foreigners authority.
Self-employment
Any self-employed activity that is not prohibited, profit-seeking and intended to last for a certain period of time is to be classified as a "self-employed activity", on the premise that it is not an employment relationship. Typical self-employed activities include, for example, the operation of
- a wholesale/retail business,
- an import/export business,
- a gastronomy,
- a commercial agency, etc.
Freelance activities, such as those of artists (painters, musicians, writers) or journalists, engineers, architects and the management of agricultural and forestry enterprises, are also considered to be self-employed activities.
Furthermore, the following are considered self-employed
- in the case of a limited partnership (KG): each individual general partner,
- in the case of a general partnership (OHG): each individual shareholder,
- in the case of a civil-law partnership (BGB partnership): each individual shareholder,
since a partnership itself (Personengesellschaft) cannot be regarded as a trader.
Similarly non-self-employed
The representative bodies of legal entities, such as managing directors of limited liability companies or board members of stock corporations, do not formally exercise any self-employed activity, but may be treated as self-employed persons on the basis of their function. This depends on the amount of capital they hold in the company.
Capital participation in companies
In principle, purely capital-based participation in companies is not to be classified as self-employment. This applies to a "silent partner" and a limited partner of a KG, and generally it applies to the shareholder of a GmbH as well.
Prerequisites for starting a self-employed activity
As a result of commencement of the Skilled Immigration Act for qualified professionals on March 1, 2020, the requirements for self-employment by foreigners have been significantly reduced. Self-employment is now linked to the condition of a residence title. It is permitted unless there is a legal prohibition or restriction (Section 4a (1) of the Residence Act). As a result, it is generally possible for all foreigners residing in Germany to take up self-employment.
Legal prohibitions exist, for example, for certain residence titles such as a Schengen visa or in the case of tolerance. Legal restrictions exist, among other things, for residence titles for the purpose of studying.
Whether self-employment is permitted is usually noted in the respective residence title.
In addition, a residence permit to take up self-employment can be issued to non-EEA foreigners not resident in Germany if:
Legal prohibitions exist, for example, for certain residence titles such as a Schengen visa or in the case of tolerance. Legal restrictions exist, among other things, for residence titles for the purpose of studying.
Whether self-employment is permitted is usually noted in the respective residence title.
In addition, a residence permit to take up self-employment can be issued to non-EEA foreigners not resident in Germany if:
- there is an economic interest or regional need,
- the activity is expected to have a positive impact on the economy, and
- the financing of the project is secured by equity or a loan commitment.
The assessment is based on the viability of the underlying business idea, the foreigner's business experience, the amount of capital invested, the impact on the employment and training situation and the contribution to innovation and research. The foreigners authority has a wide scope of decision-making in this regard. The law does not stipulate any concrete minimum requirements for the amount of investment or the number of new jobs to be created.
In the case of the "regional need" to be examined, supply objectives or other municipal policy reasons are considered in the decision, e.g. if there are gaps in the infrastructure which the foreigner can help to fill with his intended activity. Benefits can also result from bilateral agreements.
The foreigner must be able to prove or credibly demonstrate that the requirements are met. The application should therefore ideally enclose a detailed business plan.
The foreigner must be able to prove or credibly demonstrate that the requirements are met. The application should therefore ideally enclose a detailed business plan.
The abovementioned requirements do not have to be fulfilled if the foreign national
- previously successfully completed a course of study at a German state or state-recognized university or comparable educational institution,
or - holds a residence title as a researcher or scientist (§§ 18b, 18d, 19c AufenthG)
and - the intended economic activity shows a connection to the knowledge gained from higher education, research or activity as a scientist or scholar.
These deviating prerequisites must also be proven or made credible.
Furthermore, the above-mentioned requirements do not have to be fulfilled if the foreigner intends to work as a freelancer. In these cases, for the residence permit to be issued, another permit to exercise a freelance profession must have been granted or promised to be granted.
The residence permit is initially issued for a limited period of time, usually one year. After three years, this can be converted into an unlimited settlement permit if the planned activity has been successfully realized and the livelihood is permanently secured.
Foreign self-employed persons who are older than 45 years of age can only be granted a residence permit if they can prove that they have sufficient retirement provisions.
Furthermore, the above-mentioned requirements do not have to be fulfilled if the foreigner intends to work as a freelancer. In these cases, for the residence permit to be issued, another permit to exercise a freelance profession must have been granted or promised to be granted.
The residence permit is initially issued for a limited period of time, usually one year. After three years, this can be converted into an unlimited settlement permit if the planned activity has been successfully realized and the livelihood is permanently secured.
Foreign self-employed persons who are older than 45 years of age can only be granted a residence permit if they can prove that they have sufficient retirement provisions.
Application for the residence permit
Foreigners who wish to enter the Federal Republic of Germany in order to take up self-employment must apply for a corresponding residence permit at the respective German permanent mission abroad before entering the country. The application is forwarded via the German Foreign Office to the foreigners authority responsible for the intended place of residence with the request for approval. Irrespective of the result of the examination by the respective foreigners authority, the decision on the issuance of the entry visa is the sole responisbility oft he German mission abroad.
If foreigners are already legally residing in the Federal Republic of Germany and intend to take up self-employment, or intend to expand or change the subject of an activity already permitted under residence law, the application must be submitted to the immigration authority.
If foreigners are already legally residing in the Federal Republic of Germany and intend to take up self-employment, or intend to expand or change the subject of an activity already permitted under residence law, the application must be submitted to the immigration authority.
Involvement of economic or other specialized authorities
Pursuant to Section 21 of the Residence Act (AufenthG), the competent bodies for the location of the planned activity (Chamber of Industry and Commerce or Chamber of Handicrafts), the responsible trade bodies, public and judicial trade associations and the authorities responsible for the occupational permit are involved in examining the requirements for granting the residence permit.
Decision of the foreigners authority
In its decision, the foreigners authority is not bound by those statements. It must make a decision free of discretionary errors, taking into account all circumstances. The statement of the Chamber of Industry and Commerce towards the Foreigners Authority is of an internal nature only. Its result (positive or negative) is generally not communicated or made available to applicants in order not to prejudge the decision of the foreigners authority.
Member companies of the Cologne Chamber of Industry and Commerce and all persons planning to start a business in the Cologne region can obtain further information here. Please contact us!